Tag - Manufacturing

To keep up with its impressive growth story, China is devouring more raw materials than any other nation. Its use of commodities is remarkable: China consumes nearly 30% of the global aluminum and zinc supply, a quarter of its copper and it produces and consumes one-third of the world's steel.

Steel is as valuable as gold to the Chinese, who require huge amounts of the material to feed booming demand from its unprecedented infrastructure build-out and manufacturing, automotive and shipbuilding sectors. Steelmakers and steel product producers in China have aggressively expanded their operations and stepped up production in recent years to meet these needs.

One company cashing in on this ever-growing demand is China Precision Steel, Inc. (Nasdaq:CPSL), formerly OraLabs Holding Corp, a value-added steel processing company that manufactures and sells high-precision, cold-rolled steel products. Its roughly 40 specialty products are mainly used in the manufacture of automobile parts and components, appliances, kitchen tools, microelectronics, saw blades, textile needles, and food packing and containers. It also provides the heat treatment and cutting of medium- and high-carbon hot-rolled steel strips. Though the company primarily does business in mainland China through its wholly owned subsidiary, Shanghai Chengtong Precision Strip Co., Ltd., last year CPSL began exporting products to Thailand, Indonesia, the Philippines and Nigeria.

The company had a solid third quarter for the period ended March 31. Revenue grew 61% year over year to $18.7 million. Net income came in at $4.6 million, or $0.10 per diluted share, a 231% increase over the year-ago quarter. Gross profit rose 58% to $5.3 million. Exports accounted for 19% of revenue a 2.3% increase from the previous year. In a move to secure a stable supply of raw material, the company advanced suppliers $26.8 million during the quarter, reducing its amount of cash on hand to $14.3 million. With investment and new construction expenditures expected to reach $20 million, CPSL may need to access capital markets (the company plans to invest in a new production line for high-quality stainless steel and a new cold roll . . .

With the U.S. auto industry in a prolonged slump, the red ink has been trickling down to the balance sheets of auto equipment suppliers like oil from a leaky engine.

Of course, there are always exceptions, and a promising one is FARO Technologies Inc. (Nasdaq:FARO). The Lake Mary, Fla. company makes unique robotic arms and laser devices that measure parts rolling off manufacturing lines at auto, aerospace and heavy equipment makers, among others.

FARO handed Wall Street a Valentine’s Day present with its 2007 fourth-quarter results, reported Feb. 14. Earnings were up 127% to $8.4 million, or $0.50 per diluted share, compared with $3.7 million, or $0.25 per diluted share, a year earlier. Fourth-quarter revenue was up 34.9% to $59.2 million, from $43.9 million in the year-ago quarter. The Street consensus was for earnings of $0.34 per share, while analysts had a consensus revenue estimate of $53.04 million for the quarter.

That is, however, coming off a weak quarter, in which its sales fell below both the trend line and the Street consensus. Still, analysts take heart in the latest quarter and in the growth in 2007, in which revenues rose 25.7% to $192 million. “The growth we saw in 2007 should have a positive effect on 2008 and 2009,” said Mark Jordan, an analyst with Noble Research.

The fourth-quarter earnings gave the stock a nice pop. From a 52-week low of $19 in mid January, it jumped to over $34 in late February, and has since settled back to $32.22 at Tuesday’s close. Its 52-week high was $50.27, reached last October. Its market cap is $537 million.

There is still room to grow. Jordan has a target price of $39, while Richard Eastman at Robert W. Baird & Co. is looking for $36. “It’s an aggressive small-cap growth name,” Eastman said.

FARO was originally founded to create articulated robotic arms for medical uses, such as robotic surgery. But in the mid-1990s, it found a bigger market providing quality control for manufacturers. The portable arm can reach out and touch newly made parts right on the factory floor, generating measurements to . . .

Getting toys to market isn’t child’s play, but Jakks Pacific Inc. (Nasdaq:JAKK) is one company that is winning this game.

Shares of the Malibu, Calif.-based company are closing in on the 52-week high of $31.42 seen last July, following a blowout holiday quarter. For investors, the question is whether they should add Jakks Pacific to their toy chest.

The toy industry has had its share of issues to deal with in the past year: a foundering economy, waning interest in non-tech wares, and safety concerns mostly over foreign-made items. Like most toymakers, most of Jakks Pacific’s goods are produced in Asia.

The gaggle of Wall Street analysts who follow Jakks Pacific have issued generally favorable opinions, with four of the nine polled by Thomson Financial having a “buy” or “strong buy” rating. The other five have it at “hold.” The median price target for Jakks is $31.50, and the current quarter is expected to yield $0.19 earnings per share, up 59% from a year earlier. Shares closed Friday at $28.14.

The top toy players are Mattel Inc. (NYSE:MAT), with $6 billion in 2007 revenue, and Hasbro Inc. (NYSE:HAS), at $3.8 billion in revenue. Jakks Pacific ranks third, with 2007 revenue of $857.1 million, a 12% increase from the year before. The company relies on three big customers: Wal-Mart Stores Inc. (NYSE:WMT), Target Corp. (NYSE: TGT) and privately held Toys “R” Us, accounting for a respective 19.3%, 14.5% and 14.1% of 2007 net sales.

Jakks be nimble, and Jakks be quick in locking up licensing deals with the hottest prospects to produce a related game, doll or toy.

Hannah Montana? Sure. NASCAR? Certainly. Toss in World Wrestling Entertainment Inc. (NYSE:WWE), SpongeBob SquarePants, old stars like Rocky, Barney and Pokemon, and the company seems to have a winning line-up. Jakks Pacific has also parlayed such names as Dirt Devil, Pizza Hut and McDonald’s into pretend-play products, while up-and-coming country star Taylor Swift, a Grammy nominee . . .

Federal-Mogul Corp. (OTC: FDMLQ) reported that it emerged from Chapter 11 on Dec. 27. The auto parts manufacturer issued 49.9 million shares of its Class A common stock and 50.1 million shares of its Class B common stock.

“We begin 2008 with confidence in our future and we are well positioned with our global strategy for sustainable profitable growth,” CEO José Maria Alapont said in a statement. “We wish to thank our customers, employees, stakeholders and the communities in which we do business for their loyalty and support. We remain committed to deliver value to all of them.”

The Southfield, Mich.-based company reported that it entered into a $3.5 billion exit facility.
 
“We have continued during the restructuring process to grow our business globally and have strengthened our financial performance,” Alapont said. “The worldwide Federal-Mogul team is fully dedicated to exceed customer and market expectations by creating value through innovative technology, leading products and service excellence at competitive cost. We are pleased to emerge as a world-class, diversified global supplier.”

The company was forced into bankruptcy six years ago due to asbestos-related lawsuits. Federal-Mogul has about 45,000 employees worldwide and makes a wide range of automotive products, including windshield wipers, Champion spark plugs and pistons.

In 2001, hundreds of thousands of lawsuits seeking millions in damages were filed against the firm. Federal-Mogul bought several companies in 1998 that were facing asbestos lawsuits. The companies Federal-Mogul acquired were businesses that used asbestos, which causes lung cancer and respiratory illnesses, to make brakes and gaskets.

Billionaire investor Carl Icahn, who owns a quarter of Federal-Mogul, is expected to have options to buy more than three-quarters of the company’s stock.

In morning trading, FDMLQ shares are flat at $0.45. Over the last 52 weeks, shares have ranged from $0.40 to $1.39.

China Sunergy Co., Ltd. (Nasdaq: CSUN), a specialized solar cell manufacturer this morning reported that it ramped up production of its selective emitter cells, pushing up the stock roughly 9% in pre-market.

The Chinese small cap said that from Nov. 10 to Dec. 14, it produced approximately 380,000 pieces of selective emitter cells on one of its six production lines, compared with approximately 36,000 pieces, produced during October.

Average daily conversion efficiency rates of the cells produced had an average conversion efficiency of 17.5%. The company also said that peak efficiency reached 18.4%.

Despite a substantial increase in conversion efficiency rates, China Sunergy said that incremental costs, which consisted mainly of depreciation and other raw material costs, were marginal for selective emitter cell production over more traditional P-type cell production.

Shares of China Sunergy (CSUN) climbed 9.27%, or $1.01, to $11.09 in pre-market trading. Shares of China Sunergy have been trading in the range of $4.83 to $16.70 for the past 52 weeks.

Investors are having great chemistry with ShengdaTech, Inc. (Nasdaq: SDTH). The Chinese manufacturer and seller of nano precipitated calcium carbonate (NPCC) and coal-based chemicals is ramping up production capacity, which is translating into stellar top and bottom lines.  

While the company still generates a pretty penny from coal-based chemicals such as ammonium bicarbonate and liquid ammonia, which the company then markets as chemical fertilizers and raw materials for the production chemicals, ShengdaTech’s revenue growth stems from its NPCC production. NPCC is extracted from limestone and used in the manufacturing of paints, rubber, plastic and tires.

NPCC production climbed to 130,000 metric tons (MT) from 30,000 MT in the past year. The Chinese small cap brought 40,000 MT of NPCC online in July and jumpstarted construction of 60,000 MT of NPCC capacity at a new facility in Xianyan City, Shaanxi Province in September. The new lines are expected to be completed in the first quarter of 2008 and will begin contributing to revenue at that time, according to ShengdaTech’s CEO, Xianghzi Chen.  

Once capacity at the company’s new facility is completed, total annual production capacity is expected to reach 190,000 MT.

In addition to strong product production, the company is creating efficiencies within its operations. ShengdaTech upgraded equipment used in its chemical factory in the third quarter, which created operating efficiencies that offset decreases in chemical prices and resulted in record gross margins in the third quarter.

Shares of Trex Co., Inc. (NYSE: TWP) bolted this morning in pre-market trading after the nation’s largest manufacturer of composite decking, railing and fencing raised its revenue guidance for 2007.

The Winchester, Va.-based company said it now expects net sales to be in the range of $335 million to $345 million ($350 million to $360 million before taking into account its product replacement reserve). The revised guidance is up from the previously forecasted range of $315 million to $335 million.

Trex attributed its upwardly revised guidance to stronger-than-anticipated performance in the first two months of the company’s traditionally seasonally slow fourth quarter—particularly at a time when the homebuilding and remodeling markets continue to exhibit weakness.

The small cap pointed out that a key to its positive results is a favorable market response to quality improvement initiatives Trex implemented for the past 18 months and the company’s line-up of decking, railing and fencing products

Trex also noted that it is receiving a positive response to its 2008 products and programs, including Trex Escapes, an ultra low-maintenance deck board; Trex Trim, a new exterior trim product for house molding, fascia and soffits; and greatly expanded design options for Trex Artisan and Designer Railing.

Shares of Trex (TWP) jumped 11.28%, or $0.76, to $7.50 in pre-market trading. Shares of Trex have been trading in the range of $5.34 to $27.70 for the past 52 weeks. 

Merix Corp. (Nasdaq: MERX) this morning reported it swung to a net loss for its first fiscal quarter of 2008 that was wider than expected.

For the three months ended Sept. 1, the Beaverton, Ore.-based company recorded a net loss from continuing operations of $2.5 million or $0.12 per share, compared with net income of $3.6 million, or $0.17 per share, for the first fiscal quarter of 2007. Merix’s bottom-line results came in wider than the net loss of $0.08 six analysts polled by Thomson Financial were expecting.

The net loss included $0.2 million of severance costs due to the firm’s previously announced Hong Kong closure. The firm said the decline in net income was expected and is primarily due to the normal cyclical slowdown that was experienced in its North American markets

Revenues clocked in at $100.1 million, compared with revenues of $103.0 million for the first quarter last year. The consensus of five analysts polled by Thomson Financial was for revenues of $98.74 million. 

Shares of Merix (MERX) were halted in pre-market trading.